Anti-Kickback Statute, Stark, and EKRA Violations

Medicare, Medicaid, and other federal health care programs rely upon medical providers to exercise independent judgment and focus solely on the best interests of patients in making treatment decisions. When a physician or other health care provider selects a treatment course because of a personal financial benefit, that decision is not necessarily in the patient’s best interest and can lead to increased costs, unnecessary procedures or services, and/or harm to a vulnerable patient population. This, in turn, can result in federal health care programs paying out millions of dollars’ worth of improper and fraudulent payments to providers.

To protect patients and the precious dollars allocated to government health care programs, the federal government enacted three powerful laws: the Medicare and Medicaid Anti-Kickback Statute, the Stark Law, and the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). Many states have followed suit and enacted similar prohibitions. All three laws are criminal statutes, but Congress and the courts have deemed that a violation of one of these laws renders an offending provider’s claims to government health care programs false or fraudulent, thus in violation of the civil False Claims Act (FCA) as well.

Anti-Kickback Statute

The Anti-Kickback Statute is the popular name for The Medicare and Medicaid Fraud and Abuse Statute, 42 U.S.C. § 1320a-7b(b). The AKS is a federal criminal law that prohibits offering or accepting kickbacks intended to generate health care business.  Violation of the AKS is a felony. And punishable by ten years in jail and fines of $100,000 per violation.

Violation of the AKS triggers liability under the Civil Monetary Penalties Law.  The CMPL carries penalties of up to $50,000 per kickback, in addition to three times the amount of the remuneration.  It also makes the resulting bills to the government false under the False Claims Act,  making the violator responsible for three times the value of the bills, and a False Claims Act Penalty of up to $27,894 per bill.

The AKS prohibits anyone from requesting, receiving, offering, or paying kickbacks intended to generate health care business.

1. The prohibition applies to both sides of the transaction – the kickback requester/receiver and the offeror/payer.
2. The Anti-Kickback Statute uses the term “remuneration” which, as we shall see, is incredibly broad.  It includes anything of value.
3. The Anti-Kickback Statute prohibits paying remuneration to several kinds of people:
   • Doctors when referring patients to things paid for by health insurance (drugs, tests, equipment, supplies, specialists, hospital services, etc.);
   • Patients when choosing to buy or lease or order things paid for by health insurance;
   • Procurement Staff/Management when choosing what supplies to buy, lease, or order for organizations; and,
   • Marketing/Advertising/Sales – Anyone in a position to encourage the buying, leasing, ordering of things paid for by health insurance.  This includes all sales representatives, anyone doing advertising and marketing, anyone offering testimonials, talks, dinners, product education etc.
4. 4. The Anti-Kickback Statue has an intent element.  It only applies if the purpose of the kickback is to reward or induce the referring, buying, etc. The intent element is satisfied at any time one purpose of the remuneration is to induce referrals or purchases.

Health And Human Services Office of Inspector General has created 34 regulatory safe harbors.  The regulatory safe harbors are listed at 42 C.F.R. §§ 1001.952(a)-(kk).  Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. An arrangement is only protected if it fits squarely in the safe harbor and satisfies all of its requirements.

Stark Law

Similarly, the Stark Law, 42 U.S.C. 1395nn, prohibits patient referrals where the referring physician has a financial interest in the health care provider or entity to which the patient is being referred. Unlike the AKS, the Stark Law is a “strict liability” statute, meaning that one need not have intended to violate the law in order to be held accountable under it. The Stark Law covers referrals for a wide variety of services (referred to as “designated health services” in the statute):

• clinical laboratory services.
• physical therapy, occupational therapy, and outpatient speech-language pathology services.
• radiology and certain other imaging services.
• radiation therapy services and supplies.
• durable medical equipment and supplies.
• parenteral and enteral nutrients, equipment, and supplies.
• prosthetics, orthotics, and prosthetic devices and supplies.
• home health services.
• outpatient prescription drugs.
• inpatient and outpatient hospital services.

Eliminating Kickbacks in Recovery Act of 2018 (EKRA)

Congress enacted EKRA, the Eliminating Kickbacks in Recovery Act of 2018, to fight patient brokering and recovery profiteering. EKRA prohibits accepting or paying kickbacks for referrals to recovery homes, clinical treatment facilities, or laboratories.  As a result, EKRA promises to help stem the tide of opioid related fraud.

EKRA operates by prohibiting any recovery home, clinical treatment facility, or laboratory from paying kickbacks to anyone. Notably, EKRA applies to all laboratories whether or not they perform substance abuse testing. For example, it would apply to a hospital laboratory that tests only hospital patients.

In many respects EKRA is similar to the AKS.  However there are some notable differences:

• EKRA applies to privately paid services
• EKRA Has Narrower Safe-Harbors
• EKRA has substantially higher penalties than the AKS

Common Kickback and Stark Law Violations

Together the AKS and the Stark Law are powerful tools to root out corruption in medical decision-making throughout the health care system. Whistleblowers, including several represented by our attorneys, have been instrumental in exposing kickback and self-referral schemes around the country by filing qui tam complaints under the FCA. Here are just a few examples:

• hospitals tying a physician’s compensation to the revenue generated by the physician’s referrals for diagnostic services like X-rays (i.e., the more referrals for the hospital’s services that the doctor makes, the more money the doctor receives).
• a cardiac monitoring service aggressively marketing a billing scheme that made it more profitable for physicians to use its service than its competitors.
• pharmaceutical companies providing expensive meals, travel, and speaker fees to physicians to reward physicians for and/or induce physicians to prescribe their drug product.
• below-market rental agreements between a hospital and a physician group, two physician groups, or a physician group and a laboratory company – all designed to induce physicians to refer their patients to the other entity.

How to Report Kickback & Stark Law Violations

The above are just some examples of the many different types of AKS and Stark Law violations. Both statutes have numerous exceptions and safe harbors that should be carefully analyzed by an experienced practitioner. If you think that you have information relating to violations of either law, please contact us for a free, confidential consultation.